Games market slump continues

The GAME Group's woes could continue, thanks to a global slump in the games market which shows no sign of slowing.

The global game market continues to slip, with market watcher NPD Group claiming a drop of 25 per cent in March alone - despite the high-profile launch of BioWare's Mass Effect 3.

NPD's figures suggest that the global market for computer and video games continues to slide, following a claimed drop of 20 per cent in February and 34 per cent in January compared to the same period last year. In real figures: the global games market in March was worth a mere £690 million compared to £922 million this time last year.

The drop comes across the entire gaming market: hardware dropped 35 per cent, software 25 per cent and even accessories - typically a money-maker for high-street retailers thanks to easy upsell potential and high margins - were down 8 per cent year-on-year despite increased shipments, as margins are squeezed across the channel.

Not everything shrank in March, however. 'Outside of new physical retail sales, we find that the consumer spend on content on used games, rentals, subscriptions, mobile games, social network games, digital full game downloads, and add-on content accounted for an additional $2.5 billion to $2.7 billion across the US, UK, France, and Germany in Q1 2012,' NPD analyst Anita Frazier explained in a report to investors.

The massive drop in turnover for the games industry comes at a bad time: GAME Group was forced to close 277 of its stores ahead of a buy-out from the OpCapita investment group, due to an unusually slow Christmas period. With OpCapita needing to keep the creditors on-side, it needs to see growth in the games market - not the continued slump NPD's figures demonstrate.

There are a few bright spots to be found in NPD's report: BioWare's Mass Effect 3 managed to sell more than twice as many copies as its predecessor in its first month, suggesting that there's still room in the shrinking market for a triple-A title to do well. Non-traditional accessories, including stored-value points cards, subscription cards and character packs for RFID-based collectible game Skylanders, also showed growth and accounted for seven of the top ten best-selling accessories for the month.

There's a key metric missing from NPD's analysis, however: digital distribution. The research outfit readily admits that its figures do not reflect sales made through publishers own-brand digital distribution services, like Valve's Steam or EA's Origin, hiding potential growth for the market. While NPD is working with fellow researcher EEDAR to get a handle on digital distribution figures, accurate results won't be available until a future report.

Should the disappearing sales prove to be simply moving to digital distribution platforms, the games market may not be in quite so parlous a state as NPD's research indicates. Such a move, however, would prove devastating for high-street retailers - including OpCapita's latest investment - if it continues at its present pace.

There are a few bright spots to be found in NPD's report: BioWare's Mass Effect 3 managed to sell more than twice as many copies as its predecessor in its first month, suggesting that there's still room in the shrinking market for a triple-A title to do well.

Initial sales for ME3 were good, but they dropped rapidly after the ending fiasco surfaced.

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character packs for RFID-based collectible game Skylanders, also showed growth and accounted for seven of the top ten best-selling accessories for the month.

And it's still hard to find the Skylanders figures in the shops. They fly off the shelves as soon as they're back in stock.

I'd say this is misleading, as you're literally comparing a couple of months to another couple of months. Important for companies living hand-to-mouth (like Game was), but not indicative of the market overall.

I'd prefer to see some MAT (moving annual total) figures, this is a far more realistic view of the market, especially one that's seasonal.

On top of that, NPD admit themselves there figures only account for less than 30% of the actual gaming market, which isn't remotely representative. All it really means is retail sales are falling, and everyone knows that anyway.

1. We are moving to digital distribution quite rapidly, so these figures are only showing a small part of the picture and are expected to be in a negative trend.

2. Most big studios spend the bulk of their marketing and development budget on re-hashes of the same old games. People eventually grow out of/get bored of these games and move onto other things. IE oh no, not another MW game with slightly different weapons and even more quick fixes from ranks and perks.

Eventually there will be no growth, just a static turnover of old players leaving and new younger ones buying into the franchises.

Originally Posted by fodder1. We are moving to digital distribution quite rapidly, so these figures are only showing a small part of the picture and are expected to be in a negative trend.

Unfortunately, if the movie and music industries are anything to go buy, digital sales are going to get way worse before they get better...to many superfluous rich men in suits desperately trying to remain relevant in a changing world.

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2. Most big studios spend the bulk of their marketing and development budget on re-hashes of the same old games. People eventually grow out of/get bored of these games and move onto other things. IE oh no, not another MW game with slightly different weapons and even more quick fixes from ranks and perks.

The ironic thing is that the more money they throw at a game...the worse it gets, as those holding purse strings start getting nervous, and then urge a risk-free game.

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Eventually there will be no growth, just a static turnover of old players leaving and new younger ones buying into the franchises.

But it's OK, because a hyperactive's fourteen year old's money is as good as a mature gamer. Art? Who cares? Bottom line? Hell yes!

Originally Posted by thilBut it's OK, because a hyperactive's fourteen year old's money is as good as a mature gamer. Art? Who cares? Bottom line? Hell yes!

for a franchise like COD that brings out one game a year yes. but for the industry as a whole mature gamers tend to have much more disposable income. they keep the industry as a whole going. but then disposable incomes have been squeezed of late so i am not surprised in the least that retail has suffered as most people will be more inclined to save a few pounds by going digital/online and wait a few days to download/arrive.

plus there haven't been many good games released of late, in my eyes anyway, just waiting for cs:go (beta seems ok but it aint no tf2) and borderlands 2 (a game that seems to have a bit of coolness about it, refreshing!) now just to play my £5 deus ex download while i wait.

Originally Posted by BauulI'd say this is misleading, as you're literally comparing a couple of months to another couple of months. Important for companies living hand-to-mouth (like Game was), but not indicative of the market overall.

I'd prefer to see some MAT (moving annual total) figures, this is a far more realistic view of the market, especially one that's seasonal.

On top of that, NPD admit themselves there figures only account for less than 30% of the actual gaming market, which isn't remotely representative. All it really means is retail sales are falling, and everyone knows that anyway.

a) nothing out there of note all big titles came out for christmas this year. Lat two year March was the big month
b) Still playing old titles. I've 20 games to catch up on and will only buy more if theres a steam sale on.
c) All my games are digital downloads and I refuse to buy from origin.

I would argue that digital distribution is an even more important barometer in the video game market; much more so than movies or music. All of the major consoles have their own digital distribution stores which have full retail titles available for download, as well as smaller games, indie games, downloadable content, etc. It's even more important for the PC; the last few times I've been into the city centre, I've made a point of seeking out PC games in retailers. I cannot remember any time in the last year or so that I've seen a PC game on a retail shelf.